June 2022 Austin Market Update

[David Ivy]

The June 2022 numbers from the Austin Board of Realtors shows the Austin metro market continuing to cool and stabilize in response to high inflation, rising mortgage interest rates, record high home prices, and rumblings of a recession in the US. Here are some notes:

• The median home price in Austin was up 7% over June 2021 at $615,000. The median home in the greater metro sold for around $537,000 last month, which is up 13% year over year. While those are still robust increases, we’re seeing appreciation slow in the Austin area compared to the frenzied times experienced the past couple of years.
• Housing inventory is finally increasing from the rock-bottom levels buyers experienced in recent years. There is 1.8 months of inventory in Austin, which is up 1.1 months from this time last year. Inventory in the greater metro jumped 1.5 months over the same period to reach 2.1 months. This is very welcome to buyers, of course, but it’s also healthy for the market as a whole. Note, however, that we’re still in an extreme seller’s market at these inventory levels. A buyer’s market where the current pricing trend requires 7+ months of inventory.
• You might expect the mortgage rate environment to reduce the number of owners listing their properties for sale. However, at least so far, listings have increased in Austin and the surrounding metro. New listings are up 15% in Austin and 19% in the metro compared to this time last year, when rates were lower and talks of recession weren’t in the news. New construction is contributing to the listing numbers, as are iBuyers (e.g. Opendoor) with many homes acquired during the recent explosively hot market still sitting on their books awaiting to be sold.

Here are stats for Austin the greater metro:

Overall, while the Austin metro is still in a strong seller’s market, conditions are much more favorable for buyers now than they were in the past couple of years. At present, we can no longer expect nearly every listing to get multiple offers or to sell in one weekend for a price WAY above asking. Moreover, the market in the coming months appears to be trending in the direction of higher inventory and slower appreciation. So, while rates will likely remain in 6%+ territory for some time, those buyers who remain in the Austin market should have a much easier experience than in later 2020 through early 2022.

[David Ivy]

@Robin Simon

When making offers on investment properties, such as duplexes, the competition in the Austin area is very noticeably lower than it was earlier this year and in 2021. This is purely anecdotal, but I personally have had multiple investor clients in recent months put their searches on hold--perhaps indefinitely--due to interest rates, economic uncertainty, and the losses they've taken in their broader portfolios. I have discussed the longer term market outlook for the Austin metro, given data that rents are continuing to rise, and shown that rates in the 6% range are still low from a broader historical perspective. However, it seems many are taking a "wait and see" approach at the moment. Other agents I know have echoed this experience.

I experienced something similar with my non-investor buyer clients who are looking for a primary residence. However, unlike the pure investors described above, I'm starting to see a number of owner-occupant buyers who initially moved to the sidelines when rates increased to 6%+ territory resuming their searches, some with modified criteria and some with the same criteria. I make sure these clients understand that, while rates are higher than previous years, the Austin metro is still in a seller's market with rising prices. Yes, you're either making a higher payment or buying at a lower price point than before. However, the brutal multiple offer situations with offers WAY above asking, full appraisal waivers, buyer paid title, high option fees, etc. are much less common at this time.

So, my personal impression, and that of colleagues I speak with, is that there are fewer buyers of all kinds at the moment. However, investors seem to have been hit more than non-investor buyers.